AsiaEast AsiaThe EU oil price cap may result in 'violent' surges, according to...

The EU oil price cap may result in ‘violent’ surges, according to the Economist

According to the outlet, limiting Russian seaborne crude supply might destabilise the energy market.

News via RT

As the European Union’s sanctions on Russian oil are about to kick in next week, the measure could result in price shocks on the global market, The Economist reported on Friday. The EU has agreed on a $60-per-barrel price cap on Russian seaborne oil.

According to the report, European insurers and shipping firms have long had a “vice-like hold” on energy markets. Fully 95% of property and indemnity insurance for all oil tankers has been handled by firms from the UK and the EU. This appeared to be a lever with which the West could control the sale of Russian oil globally.

However, if Russian oil fails to make it to the market, then global oil prices may spike, hurting Western consumers, the outlet writes. “Hence America’s Treasury Department has since devised a cunning plan to water it down: to let European firms continue to offer their services, provided the oil involved is bought at a suppressed price set by the West.

Everything depends on how Moscow responds, according to the Economist report, which warns the Kremlin could cut its oil exports, relying on a smaller group of non-Western tankers and insurers, and sending global prices spiraling.

“The other uncertainty is how much power the West will ultimately wield over global oil markets.”

The report noted that countries such as China, India and Indonesia want to avoid participating in Western sanctions and embargoes. They are reportedly seeking alternative sources of day-to-day insurance–and, because the ban was announced six months ago, “have had time to prepare.

According to The Economist, the “true balance of power” in oil markets will become apparent after December 5, with a “violent price spike” possible.

“Just as financial sanctions have energized attempts to evade the Western banking system, so the war will lead China, India and others to circumvent the West’s energy infrastructure. As weapons, sanctions and embargoes have their limits–and a finite shelf-life,” the outlet concludes.

Nothing in this content has been modified except the title and the featured image. The content fetched via RT

Latest Updates

Yashasvi Jaiswal

Yashasvi Jaiswal’s Big Break: Selected to Replace Ruturaj Gaikwad in Team India’s WTC Final Lineup

Discover the exciting news of Yashasvi Jaiswal's selection as Ruturaj Gaikwad's replacement in Team India's squad for the WTC Final. Get insights into Jaiswal's journey and the impact he can make on the grand stage.
Cough Syrup

The Tragic Case of Child Deaths Linked to Indian Cough Syrup

The devastating impact of child deaths caused by Indian cough syrup highlights the urgent need for pharmaceutical safety and accountability. These incidents serve as a stark reminder of the importance of stringent regulations, quality control, and international collaboration to prevent such tragedies in the future.
Volodymyr Zelenskyy

Leaked Pentagon Documents Reveal Zelensky’s Plans to Attack Russia, US Intelligence Reports Confirm

Leaked Pentagon documents reveal Ukrainian President Zelensky's plans to conduct attacks deep inside Russia, while US intelligence reports confirm his suggestions to occupy unspecified Russian border cities. The revelations have increased tensions between Ukraine and Russia, with the recent $2.95 billion military aid package to Ukraine likely to escalate the situation further. As the conflict continues, it is essential for all parties to prioritize diplomacy and peaceful negotiation to avoid further escalation of violence.